U.S. stocks saw their worst start to February since 1933 after a manufacturing report heightened concern about the economy before Friday's monthly jobs report. Overall factory activity hit an eight-month low in January as new order growth plunged by the most in 33 years.

"Suffice to say investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon. A combination of tapering, a confluence of country specific emerging market country concerns and weaker growth in China provide the backdrop for a volatile few weeks if not longer, ahead," said analysts at Credit Agricole.

Japanese stocks closed at its lowest levels in four months after the yen jumped to a two-month high against both the U.S. dollar and euro. The Nikkei is down 12 percent since hitting a six-year peak of 16,320 points on December 30, placing the index firmly in correction territory.

Furthermore, the index fell below its 200-day simple moving average (SMA) of 14,421 points for the first time since November 2012.

Noticeably, the central bank dropped its easing bias in its monetary policy statement, saying that the most prudent course of policy was a period of stability in interest rates.

"A pick-up in the inflation rate to 2.7 percent year on year in the fourth quarter showed that the room for more easing is very much limited and we continue to think that the easing cycle already finished in August last year," wrote analysts at Credit Agricole in a report.